A “one-off” second-round bailout for AIG tickled investors, who celebrated the further dilution of their stakes in this far-too-big-to-fail monster by driving its shares up more than 25 percent in premarket trade. The poster-ghoul for the credit crisis said “BOO” with its largest-ever quarterly loss – a $24.47 billion, $9.05-per-share shocker.
Taxpayers are buying another $40 billion of the company. “This is a one-off, created solely for AIG,” a Treasury official said, adding that the funds would not come from the $250 billion bank capital purchase program. The new rescue package will allow the Fed to cut to $60 billion from $85 billion the total available to AIG under a credit facility set up in September. But don’t let that fool you. The bill for AIG is now $150 billion, and could climb higher.
The terms for AIG are very good; though compared to what is anybody’s guess. Certainly they can be credited with helping drive shareholder enthusiasm. AIG is getting a much lower interest rate on its government loans and will have special government-backed buyers for its distressed securities.
Good thing this is a one-off plan. The shock-and-awe value of new rescues in this era of crisis may start to wear thin as the price-tag for repairing Wall Street approaches a trillion dollars.
Deals of the day:
* Less than a month after walking away from Wachovia, Citigroup is in discussions to acquire another U.S. bank, the Wall Street Journal said, citing people familiar with the situation.
* Swedish state-owned power group Vattenfall said it had acquired the rights to build a wind farm off Britain’s southeastern coast for 35 million pounds ($55 million).
* Britain’s Aurelian Oil & Gas said it agreed to farm out a 40 percent interest in the Poznan concessions in Poland to private-equity-funded Canamens Energy Ltd.
Trackback
2 comments so far
The additional Fed bailout of AIG is a sign that the global economic crisis is not being slowed by government policies up to the present. It also raises the question of why AIG gets $150 billion while Lehman Brothers is allowed to vanish. Such arbitrary policies are only adding fuel to the fire consuming the global economy.
- Posted by SheldonIn one word…Disgusting !
corporativismo Mussolini’s dream come true
It is really revolting to see how these plutocrats
play with all this taxpayers money.
The whole management should be held personal accountable for mismanagement and misconduct.
This money should be spend on health care, education and small businesses.
- Posted by John Boston